Major European Reinsurers' First-Half 2020 Results Show Pandemic's Impact

The first-half 2020 results of four major European reinsurers revealed considerable pandemic-related claims, although the reinsurers' capital remained resilient, according to Fitch Ratings.

Due to differences in exposure to lines of business affected by the pandemic, the impact of the pandemic on the four reinsurers—Munich Reinsurance Company, Swiss Reinsurance Company, Hannover Rueck SE, and SCOR SE—varied significantly, Fitch said.

The rating agency said the reinsurers' credit fundamentals were mostly in line with its original assessment at the beginning of the pandemic, although pandemic-related losses were larger than Fitch originally anticipated. In a statement, Fitch said it believes that the pandemic is an earnings event, even though the final losses are highly uncertain.

The underlying financial performance of the four major reinsurers remains strong, as does their capitalization, Fitch said.

All four reinsurers reported accelerating price momentum at June and July 2020 renewals, the rating agency said, noting that the industry has undertaken a more disciplined approach in order to protect earnings from pandemic-related claims and lower investment income.

Global capital markets are still accessible to reinsurers needing to raise capital to strengthen balance sheets or fund new growth, Fitch said. The rating agency estimated that reinsurers have raised more than $15 billion thus far, adding that as long as favorable market conditions persist it expects that amount to increase.